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Child Tax Credit

The child tax credit, allowed by §24, is a credit that may reduce the tax liability of a qualifying individual. However, unlike the earned income tax credit, the child tax credit does not produce a refund if the credit should exceed the amount of taxes due.

A taxpayer with a qualifying child may take a credit of up to $1,000.00 for each qualifying child. Also, if the amount of the credit is greater than the amount of tax owed, an “additional child tax credit” may be claimed.

Rules and Requirements

To qualify for the child tax credit:

Taxpayer must have a “qualifying child”; and

Taxpayer’s modified adjusted gross income must be below a certain amount. The amount at which the credit phase-out begins varies depending on the taxpayer’s filing status:

Married Filing Jointly – $110,000

Married Filing Separately – $55,000

All others- $75,000

For years after 2004, there is a uniform definition of a “qualifying child”. MAGI amounts change each year, so consult Publication 17 for the applicable year for further guidance.

The taxpayer’s qualifying child must be:

Under the age of 17 at the end of the tax year

A U.S. citizen, U.S. resident or U.S. national.

Claimed as taxpayer’s dependent

The taxpayer’s:

Son or daughter

Stepson or Stepdaughter

Adopted child – includes a child placed with taxpayer for adoption by an authorized placement agency, even if the adoption is not final. An authorized placement agency includes any person authorized by state law to place children for legal adoption.

Child must have lived with the taxpayer as a member of the taxpayer’s household for the whole year,

Taxpayer must have cared for that child as her own, and

Child is taxpayer’s brother, sister, stepbrother, or stepsister; a descendant (including a child or adopted child) of taxpayer’s brother, sister, stepbrother, or stepsister; or a child” placed with taxpayer by an authorized placement agency. This requirement was not included until 2000.

Brother or sister

Step-brother or step-sister

descentdant of any of above individuals, which includes grandchild, niece or nephew